Business

OAKLAND (CBS 5/KCBS/AP) ― Nationally, foreclosure activity shot up 12 percent from July to August and tallied a 27 percent increase from August 2007 foreclosure numbers, but there is one bright spot.

"There's a smaller year over year increase this month than there has been in previous months," said Darren Bloomquest with Realtytrac. "And, there are some states where we're seeing a lot more evidence that it's getting closer to the bottom, but unfortunately, California isn't one of them."

California cities accounted for eight of the top 10 metro foreclosure rates in the country. The Oakland M.S.A., which includes Alameda and Contra Costa counties, has the twelfth highest foreclosure rate in the country.

"One in every 126 households recieved a foreclosure filing in that metropolitan area within the month," said Bloomquest.

Irvine, Calif.-based RealtyTrac monitors default notices, auction sale notices and bank repossessions. More than 90,893 properties were repossessed by lenders nationwide last month - up more than half from 43,141 in August 2007, the company said.

The top three states in foreclosure rates were Nevada, California and Arizona, in that order, RealtyTrac said. Florida, Michigan, Georgia, Ohio, Colorado, Illinois and Indiana rounded out the top 10, though Michigan, Georgia, Ohio and Colorado all reported rate decreases year-over-year.

Weak sales, sinking home values, tighter home loan lending practices and a slowing U.S. economy hamstrung by high fuel prices has left some homeowners with few options to avoid foreclosure. Many can't find buyers or owe more than their home is worth and can't refinance into an affordable loan.

Banks and mortgage investors are also holding a glut of foreclosed properties and are slashing prices to get them off the books.

On Thursday, four Democratic senators urged the mortgage companies Fannie Mae and Freddie Mac to freeze foreclosures for 90 days on loans they hold. The troubled companies, seized by the government Sunday, should help struggling borrowers swap their mortgages for more affordable loans and stay in their homes, the lawmakers said.

An estimated 2.8 million U.S. households will face foreclosure, turn over their homes to their lender or sell the properties for less than their mortgage's value by the end of next year, predicts Moody's Economy.com.

James J. Saccacio, chief executive officer of RealtyTrac, said the lower percentage increase last month is due to a big spike in activity in August 2007. Last month, default activity was up 10 percent from a year ago and auction activity up 7 percent year-over-year, Saccacio said.

"The increases in default and auction activity could be slowing down partly as the result of new legislation passed in several states that is designed to give homeowners in distress more time before foreclosure proceedings are initiated," Saccacio said.

The next six months will be critical in terms of the housing crisis, noted Albert Saiz, assistant real estate professor at Wharton School of Business. Consumers and investors will be tracking volatile financial markets, judging the success or failure of this year's housing bill, monitoring the government bailout of Freddie and Fannie, and anticipating the impact of a new president, he said.

On the bright side, if home prices and sales stabilize or improve, the foreclosure situation could get better.

But the slow economy, high unemployment and volatile financial markets present obstacles to improvement in the foreclosure situation, Saiz said.

Together, California, Florida and Arizona accounted for more than half of the nation's volume of foreclosure activity.

Last month, California's foreclosure activity increased more than 40 percent from July and more than 75 percent from August 2007.

The California cities of Stockton, Merced and Modesto were 1-2-3 in top metro foreclosure rates. July's leader, the Cape Coral-Fort Myers, Fla., metro area, dropped to sixth. Las Vegas came in seventh.

(© 2009 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)